Save and Invest

When is the best time to buy stocks in a falling market? Here's what experts say

d3sign

The volatile stock market in the wake of the coronavirus pandemic has some wondering when the best time to buy more stocks in a down market is.

But many financial advisors say there is no "ideal" time to buy more stocks. Because no one knows what will happen with the market, it's impossible to tell when it will hit bottom and share prices will be at their lowest, Jennifer Weber, vice president of financial planning for Weber Asset Management, tells CNBC Make It

"We have no idea how long this volatility will last, nor does anyone else," says Weber. "It's important to stay calm."

As Berkshire Hathaway CEO Warren Buffett reiterated recently, "you can't predict the market by reading the daily newspaper."

In the meantime, though, you should still consistently invest for retirement and other financial goals. This strategy is called dollar-cost averaging.

You can't time the market

Dollar-cost averaging simply means consistently investing a chunk of money at regular intervals over time. If you have $1,000 you're comfortable investing, add $100 to your portfolio every week, or every other week, rather than all at once. 

This takes emotion out of the equation and prevents you from trying to time the market. Instead, you invest the same amount of money regardless of what the market is doing. If you contribute a portion of your paycheck to your 401(k) or an outside retirement account each month, then you're already benefiting from this strategy.

If the market keeps sinking, remember that, for many investors, this is okay: You are investing your money for the long term, not for this week or even this year. Unless you're near retirement, you will likely have time to recover. Future gains are never guaranteed, but the stock market reflects the economy, which will eventually recover from the coronavirus. History shows that if you can ride out market lows, stocks should gain in value over time. 

Many advisors suggest not changing up your investing strategy at all in uncertain and unstable times. You don't want to invest more than you can actually afford because you heard it was a good buying opportunity. Now is the time to be prudent with your savings and spending, Jon Ulin, a Florida-based certified financial planner, tells CNBC Make It. Don't invest money that you will need in less than five years, he says. 

If you lose your job or are recently retired, you do not want to have to sell stocks at a low point during a bear market.
Jon Ulin
Certified financial planner

"Now is not the time to go on a major spending spree to reduce stress," says Ulin. "If you lose your job or are recently retired, you do not want to have to sell stocks at a low point during a bear market or take a distribution or loan from your 401(k) account or IRA because you are cash poor."

For most investors, the total time they are invested in the market, rather than the day they got in the market, will have the bigger effect on their potential investment growth. The longer you are invested, the longer your money can compound in value and the longer you have to rebound from any downturns.

Keep investing at regular intervals and keep contributing the same amount, no matter what the market does. Let dollar-cost averaging do the rest.

Check out: The best credit cards of 2020 could earn you over $1,000 in 5 years

Don't miss:

VIDEO0:0000:00
Bill Gates follows this part of Warren Buffett’s investing philosophy
make it

Stay in the loop

Sign Up

About Us

Learn More

Follow Us

CNBC.COM